FEMA officials prep for sticker shock

Federal officials are encouraging homeowners in flood-prone communities to consider elevating their homes and increasing their deductibles to cut down on the sticker shock some homeowners have begun to experience as their flood insurance premiums increase.

Congress approved legislation last year designed to put the National Flood Insurance Program on firmer financial footing. The legislation gradually eliminates government-subsidized premiums for more than 1 million properties in flood-prone communities.

The insurance premiums for vacation and rental homes participating in the program increased 25 percent on Jan. 1. Those premiums will continue to go up each year until rates reach the level that the Federal Emergency Management Agency considers sufficient to cover flood claims and administrative costs for a flood in that particular community.

Properties that have suffered repetitive losses or substantial damage over the years will also be subject to gradual 25 percent rate increases beginning Oct. 1.

Meanwhile, in July, new property owners as well as owners who let their policies lapse will no longer be able to buy government-subsidized insurance.

Congress created the flood insurance program back in 1968 because few private insurers covered flood damage, leaving the federal government to cover the costs of disasters. Many of those covered by the program live where flood insurance is mandatory for those with mortgages from federally regulated lenders. The program was $18 billion in debt when Congress took action.

Officials with the Federal Emergency Management Agency held a conference call with reporters Friday to provide an update of the changes taking place.

"Our concern is that we get the word out to folks so they're not surprised," said Edward Connor, a deputy associate administrator at FEMA,.

Connor encouraged property owners to work with their insurance agent to obtain an elevation certificate, which will verify the properties distance from the ground. He said that increasing the elevation of a property by a foot can save hundreds of dollars per year in insurance costs.

He also said local communities can take steps to mitigate flood damage that could lead to discounts for property owners. Such steps typically include increasing the elevation of certain flood-prone properties or relocating them.